Shares of paint manufacturer Kansai Nerolac Paints Ltd. surged nearly 10 percent on Tuesday after the company’s board announced a bonus share issue of 1:2 following its March quarter results.
This means two shares will be issued for every equity share held by eligible shareholders as of the record date.
Kansai Nerolac previously announced a bonus share issue of 1:1 in the June quarter of 2010.
Companies announce bonus share issues to increase retail participation and increase their equity base. The bonus share issue is also an alternative to a cash dividend and reflects the financial health of a company.
The board of Kansai Nerolac also recommended a dividend of Rs 2.70 per share for financial year 2023. It had declared a dividend of Rs 2.25 during financial year 2022.
Kansai Nerolac posted more than five-fold growth in consolidated net profit to Rs 96.24 crore for the March quarter, aided by a low base. It had reported a net profit of Rs 19.17 crore in the March quarter of the previous financial year.
Shares of Kansai Nerolac have cooled off after the opening surge and are currently trading 3.8 percent higher at Rs 417.85. The stock is still down 4.3 percent on a year-to-date basis.
